Trump’s NAFTA replacement, USMCA Deal ‘In Trouble’, Bruised by Elections, Tariff Rows
More than six months after the United States, Mexico and Canada agreed a new deal to govern more than $1 trillion in regional trade, the chances of the countries ratifying the pact this year are receding.
The three countries struck the United States-Mexico-Canada agreement (USMCA) on Sept. 30, ending a year of difficult negotiations after U.S. President Donald Trump demanded the preceding trade pact be renegotiated or scrapped. The United States has its next presidential contest in 2020, and Canada holds a federal election in October.
“The USMCA is in trouble,” said Andres Rozental, a former Mexican deputy foreign minister for North America.
Canada’s Parliament must also ratify the treaty and officials say the timetable is very tight. Current legislators only have a few weeks work left before the start of the summer recess in June, and members of the new Parliament would have little chance to address ratification until 2020.
Trump, a Republican, has shown frustration with the Democratic-led U.S. House of Representatives for failing to sign off on the USMCA. He has threatened to pull out of the old pact, the North American Free Trade Agreement (NAFTA), if Congress does not hurry up.
Trump on Thursday threatened to slap tariffs on Mexican auto exports unless Mexico does more to stop drug traffickers and illegal immigration.
In Ottawa, Canadian Foreign Minister Chrystia Freeland said this week her government was “constantly” looking at its own retaliation list, noting that Trump’s tariffs left the country over C$16 billion worth of space to strike back.
Prime Minister Justin Trudeau, who faces a tough re-election battle, on Thursday rejected accepting quotas on Canadian steel and aluminum in exchange for U.S. tariffs being dropped.
Trudeau was criticized during the USMCA negotiations for giving ground to Trump on access to Canada’s dairy sector.
USMCA Little Different From NAFTA
An amazing amount of bickering is taking place over what is essentially the same deal. Canada is correct to be annoyed over Trump’s tactics.
Mexico no doubt will not be happy with Trump’s threats on auto parts. The US auto makers will not be pleased either.
Trump Backs Off Closure Threat
Trump Backs Down As Expected
Trump backed down from threats to close the border with Mexico as expected in this corner. We would have had chaos over auto parts, medical supplies, and food had he not done so.
Yet, Trump again threatens slap tariffs on Mexican auto exports unless Mexico does more to stop drug traffickers and illegal immigration. He won’t, else he risks USMCA.
China Trade Deal
The trade deal with China keeps getting extended and extended. I expect a signing, but as with USMCA there won’t be much in it.
Art of the Fail
In January of 2018, Democrats offered Trump $20 billion to build a wall in return for and amnesty deal. It would have solved two issues. Trump turned down that offer which he would gladly take today.
Trump promised a better NAFTA. Instead we are bickering over what is essentially the same deal. In one aspect USMCA is worse than NAFTA because it puts US companies at the mercy of a corrupt Mexican court system.
Eventually I expect USMCA and a trade deal with China to pass, but the former is essentially the same and the latter will just return to China to buying more soybeans and Boeing aircraft.
Unmaking of a Pretend Deal Maker
At this point, the whole world knows Trump is an awful negotiator. Even worse, he negotiates in a predictable pattern: scream, bluff and ask for the moon, then cave and plead for a deal at any price.
The press and the Democrats are so busy speculating on the latest legal actions and Russia nonsense that they ignore this far bigger story story sitting right in front of them.
Mike “Mish” Shedlock
Based on his history of negotiating bad deals and then taking companies into bankruptcy and getting lenders to bail him out, Trump fits quite nicely into this era of 22T of debt and rising. Expect the unexpected now that people are resigning again.
Art of the squeal. Nobody takes that pig seriously.
Why have any trade “deal” at all? Just allow individuals to trade with whomever they wish. Same thing with the EU and Brexit. If some overseas industry is “dumping” product on our market, great. The old saying “We lose money on every sale, but make it up in volume” applies to China every bit as much as it did to pets.com. Let them blow though capital until they can’t. Then perhaps more thoughtful people will get their chance. Especially for nation-states, who should be in the long game anyway.
Trump talks too much and changes his mind far too much. Why even try to strike a meaningful deal with him?
Besides, there’s only so much pressure he can apply to countries with the threat of sanctions or an increasingly impotent US MIC. If he applies sanctions, either wait him out or find a way to make any segment of the US cry out in pain. If they do, Trump will usually reverse course.
The weakness of the MIC has been laid bare by Syria. I bet when Bashar al-Assad was studying to be an optometrist he couldn’t have imagined he would one day become the model for standing up to the US military. Who knew there would be consequences to viewing wars as eternal cash cows, rather than trying to win them?
It also doesn’t help that many of our NATO allies are facing serious internal pressures resulting from their own cupidity and incompetence. We’re not exactly the united bloc we used to be.
The deal isn’t over until the deal is agreed to. Negations are messy, full of ego, full of bluffs and give/takes. Some take years or decades (for example – reference the SALT treaties – first discussed in 1967 and not full ratified until 1979).
I will take ANY of these non-deals over the Paris Accords, NAFTA, the Iranian Agreement or the Trans-Pacific Partnership (TPP). All disasters for the United States and the working man. Some deals are much worse than what you had before.
Why do want to cave so quickly for such a bad deals? It is, as if, just getting a “deal” is an ends to a mean.
Can’t blame them ,why the hell would you sign off on the exact same treatyyou had before simply so Trump can claim credit for this farce!
Nixon and Reagan tried closing the border to pressure Mexico – here’s what happened
April 5, 2019 1.39pm EDT
Aileen Teague
At the core of every “trade deal” lies two lies: 1.We, your leader(s), can protect you from competition and, 2. The protection we provide will raise your living standard.
Trade deals are a symptom of ignorance and gullibility, the natural hunting ground of politicians of every stripe.
What politician could be elected anywhere with a campaign promise of: I can’t protect you from foreign competition in a Flat Earth economy. Our only path forward to a prosperous future is to educate, innovate and work our asses off.
“…..Trump is an awful negotiator.”
He’s not any more awful than anyone else. The outcome of any negotiation over any issue of any real importance, is determined, conclusively, by facts on the ground. Not by what some privileged twit babbles or tweets about.
“Great Dealmakers” only exist in cheesy TV shows, and in the childish minds of those dumb enough to believe those represent reality.
It can work only for as long as the final “deal” has to be made in a closed room. Without each negotiating partner having the opportunity to step outside, and have tentative agreements combed over by specialist advisors. As soon as the specialists step in, the ones from both sides will be informed enough about the facts on the ground, that the outcome is derivable directly from those. No “dealmaker” required.
Progressives, ambulance chasers and others too incompetent to, in any meaningful way, alter hard facts on the ground; have every incentive to keep pretending that the only thing they can “contribute,” mindless babble about all the things others must do, is somehow what determines outcomes. It isn’t. Never has been, never will be. The Japanese didn’t surrender because the Allies suddenly become better “negotiators.” Nor the Japenese worse ones. But simply because productive people in the West had produced a bomb bigger than anything the Japanese could hope to cope with.
I agree with what you have said here, however, Trump is more visible about his trade negotiations, and therefore appears to be more awful. When other Presidents didn’t get what they wanted, it happened behind closed doors, with no publicity, so no one took notice of it.
Which is the smart way to do things. But Trump wants to be in the news every day. Good or bad doesn’t matter to him. It’s all about news domination.
Not news domination, NPDisorder.
It wasn’t the bomb that stopped Japan. Japan was on the precipice of surrender. It was bureaucrats around the emperor who could not agree as to how to surrender. It took 2 bombs which should highlight the inability of Japan to agree on which surrender terms would be acceptable.
Don’t forget that Teddy Roosevelt forced Japan to open up & militarize. Teddy dubbed the Imperial Army, honorary Aryans. He wanted them to wipe out the entire Asian continent. So as with ALL U.S. foreign policy it comes back to bite us in the ass. Yet, we the people and the complicit press allow it to happen repeatedly.
The Soviets turning on Japan, and invading them along with Japanese strongholds on the mainland that Japan needed for supplies, in addition to the second bomb, was what finally removed any conceivable doubt any Japanese decision maker may have had about how hopeless their situation had become.
for those interested: